December 19, 2023

Chancellor's Autumn Statement
22.11.2023

We have summarised below some of the key points from yesterday’s Autumn Statement from the Chancellor:

National Insurance

  • The main employee National Insurance rate will reduce by 2% from 12% to 10%, from 6 January 2024.
  • For the self-employed, the first of two cuts will see the main rate of Class 4 self-employed NICs reduce from 9% to 8% from 6 April 2024 on all earnings between £12,570 and £50,270.
  • Class 2 NI will be abolished from April for self-employed individuals with annual profits exceeding £6,725.
  • For those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension, will continue to be able to do so at the current rate of £3.45 per week.

Income Tax

  • Despite rumours of a decrease in income tax rates these remain unchanged.

Capital Gains Tax

  • As announced at the last budget, the CGT annual exemption will be cut from £6,000 to £3,000 from April 2024. Rates will remain at 10% for gains falling in the basic rate band, and 20% for everything above.
  • Anyone holding investments outside tax wrappers who are potentially impacted by these changes should seek advice to mitigate their tax liability.

IHT left unchanged

  • Despite prior speculation, the Chancellor did not announce any changes to current Inheritance Tax arrangements.
  • The Nil Rate Band Allowance for IHT is currently £325,000 per individual and tax is payable at 40% on all taxable assets above IHT thresholds.

State pension triple lock commitment with an 8.5% rise

  • The state pension will increase by 8.5% from April next year to £221.20 a week as the government continues to back the ‘triple lock’ policy.
  • The triple lock is a commitment to increase the state pension by whichever is highest of average earnings growth, Consumer Prices Index (CPI) inflation, or 2.5%.

Pension ‘pot for life’ consultation announced

  • Currently, eligible new employees must be automatically enrolled into a pension scheme of their employer’s choosing.
  • A consultation will take place for a lifetime provider model which would allow individuals to choose which pension scheme contributions are paid to, rather than the scheme chosen by their employer.
  • The aim is to reduce the number of small pots created when employees change jobs and a move towards them having one pension pot for life.

VCT and EIS sunset clause extension

  • The government has extended the existing ‘sunset’ clauses for Venture Capital Trusts and Enterprise Investment Schemes by a decade to 6 April 2035.
  • This is welcome news for investors wishing to support dynamic UK growth companies through these schemes whilst continuing to provide substantial tax breaks.

Business "full expensing" tax break made permanent

  • For every £1 that a business invests in qualifying IT, machinery and equipment, they can claim back 25p in corporation tax.
  • Companies can do this in one go as opposed to having to offset the cost against corporation tax over a longer period.

Business rate relief extended

  • The small business multiplier will be frozen for a further year.
  • The 75% discount on business rates up to £110,000 for retail hospitality and leisure businesses will also be extended for another year.

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We hope that you will find this publication useful. Please get in touch if you wish to explore how these changes may affect you or for a no-obligation discussion around your financial plans.

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